Agreement on Stimulus Package

By Alan Beattie in Washington and Alan Rappeport in New YorkFinancial TimesPublished: February 6 2009 13:46 | Last updated: February 7 2009 11:53

US Senate Democrats agreed on Friday to cut their hopes for a larger economic stimulus package and support an $800bn compromise that would give President Barack Obama an important but narrow victory.

Democrats said a vote on passage of the measure–drafted by leaders of a group of moderate lawmakers from both parties–and closely watched overseas as a sign of US commitment to help revive the world economy, would be held on Tuesday.

“We are pleased the process is moving forward and we are closer to getting Americans a plan to create millions of jobs and get people back to work,” said White House spokesman Robert Gibbs.

The tentative agreement followed news that the US economy lost a half-million jobs for the third month running in January, bringing the unemployment rate to the highest level since in 1992 and increasing the pressure for government action to stimulate the economy.

The compromise plan proposed by a group of centrist Republicans and Democrats would cut spending on items like health and education to bring the total to $780bn, below the $819bn package already agreed by the House of Representatives